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Consol Energy Inc.,
CNX -1.00%
in an effort to accelerate development of its Marcellus Shale holdings, is selling half of its interest in the huge natural-gas basin to oil-and-gas producer
Noble Energy Inc.
NBL -2.98%
for $3.4 billion.

Consol and Noble will jointly develop 663,350 acres in Pennsylvania and West Virginia, the companies said Thursday. Even with Noble taking 50% of future production, Consol said it still expects to meet its own 2015 production target of 350 billion cubic feet of gas as a result of increased drilling activities.

Pittsburgh-based Consol, which derives most of its revenue from coal, has joined a growing list of energy companies focused on developing the massive Marcellus Shale.The Marcellus, a deeply buried rock formation which stretches under several states, is one of the world's largest proven gas deposits. Companies have turned their attention to the reserves in recent years due to the advances in horizontal drilling techniques, with a process called hydraulic fracturing, or fracking.

Nicholas DeIuliis, president of Consol, said in an interview that the company hopes to gain efficiencies in drilling and well completion from Noble, which has developed other shale plays but has been looking to invest in Marcellus. "They've got much wider experience in exploration and production," he said.

Meanwhile, Houston-based Noble has said it has been looking for the right entry point into the Marcellus Shale fields. "I believe, with Consol, we have found the perfect partner that we have been searching for," Noble Chief Executive Charles D. Davidson said in a statement. Mr. Davidson told investors on a conference call that the resources acquired are greater than the company's 2010 year-end proved reserves.

Despite current low prices for natural gas, Consol said it sees demand for the clean-burning resource growing as utilities shut coal-powered plants in response to stiffer environmental regulations. Mr. DeIuliis said the coal and natural-gas sides of Consol's business aren't in competition. Consol's coal business has benefited from demand in Europe for thermal coal used by utilities. It has also benefited from greater demand for higher-priced metallurgical coal used by steelmakers, both in the U.S. and abroad.

"Both are growth businesses," Mr. DeIuliis said.

The current deal more than doubles the value of Consol's Marcellus holdings to $9,650 an acre. Consol paid roughly $3.4 billion 15 months ago for
Dominion Resources Inc.'s
D -0.55%
Appalachian exploration-and-production business. That included $1.9 billion for 491,000 undeveloped Marcellus acres, or about $3,800 per acre.

"It's almost as if they didn't pay anything for the Dominion assets, and yet now they have a 50% stake in the Marcellus Shale," said Jeremy Sussman, an analyst with Brean Murray, Carret & Co.

Mr. Sussman said analysts had expected that Consol would eventually seek a partner to help develop its Marcellus reserves.

The joint-development plan calls for the rig count to increase from four rigs currently drilling in the Marcellus to eight rigs in 2012 and 12 rigs in 2013, eventually reaching 16 in 2015. Consol will operate in the dry-gas areas of the acreage, and after a transition period, Noble will operate the wet-gas acreage, making up about 20% of the acreage.

Consol said the transaction is subject to a number of conditions and that it would begin immediately to gain consent from holders of the company's outstanding senior notes. The deal is expected to close Sept. 30.